The concept of householding customers together for various reasons has been around for ages. So, it’s no surprise that householding is a concept that has not only been used by many financial institutions, but it has also been a mystery for some of our peers.

That mystery of householding members together could exist for several reasons: staff doesn’t understand the value, staff isn’t reminded about how valuable household information is, staff doesn’t want to ask imposing questions to new or existing members about their familial relationships, etc.

All of this can be overcome, but it takes work. And it takes ongoing education to remind staff of the value that managing households effectively brings to your credit union.

What is householding?

Householding is, by definition, the practice of consolidating multiple membership accounts into a single unit. That single household then serves as a location for all data amongst the multiple members in the household to be consolidated.

For example, individual member deposit balances will be available under each membership, where when viewing the information as a household, you would be looking at the deposit balances across all members in the household.

Depending on what task you are trying to achieve, what analysis you are trying to perform, or what members you are trying to study, one of the initial questions that should be brought into the conversation is, should you be reviewing this data from an individual member perspective or a household perspective? The results of your analysis may be significantly different depending upon the approach that is used.

The use case for householding data

Let’s say we have a credit union with 20,000 members sorted into 15,000 households. That means there are 5,000 members that have familial relationships elsewhere at the credit union and therefore multiple members are associated with a single household. These numbers, when used to present statistics could lead to very different conversations.

For example, maybe as a credit union, you wish to identify the number of members without a mortgage loan versus the number of households without a mortgage. Traditionally, you probably wouldn’t find more than one mortgage within a household and traditionally, you probably wouldn’t find more than one mortgage on a single membership.

But when you look at the overall penetration statistics of how many households have a mortgage versus how many members have a mortgage, the story could be much different. If a credit union had reviewed the overall penetration of members with a mortgage account, they may come back with 10% (2,000 members) but when looking at the same value with a reference to households the percentage will increase because there are fewer records in total.

So, the same 2,000 mortgage accounts still exist, but now the total number of relationships that this value is being compared against is 15,000 (the total number of households). The penetration percentage, related to households, is then 13.3%.

Data made simpler

Householding, in general, could simplify the complex financial landscape for members by consolidating multiple memberships under one umbrella. This simplicity is pivotal in today’s world where members may juggle many different memberships, and account offerings across varied memberships, where these disparate elements can be pulled together under a single umbrella.

Depending on the scenarios, it may be worthwhile to consider your reporting options between memberships and households. But that opportunity only exists if you have a well-oiled householding machine and the staff is actively engaging with members to make the appropriate selections as it relates to the member’s household configuration. But, there are many other benefits associated with householding strategies.

Operational efficiencies

Routine tasks completed by staff, such as fraud monitoring, or collection activities may become more efficient when referring to households versus memberships.

For example, if a member happens to be delinquent, and there are other individuals associated with the household, then the credit union has the opportunity to rely on householded individuals to assist in any collection efforts they are trying to make.

Customer experience

Utilizing household data, and data about a household allows a credit union to customize and personalize any marketing, or recommendations based upon the data available from all members of the household rather than a single member.

For example, if a credit union were to identify the aggregate deposit balance by member versus the aggregate deposit balance by household, there will likely be a noticeable difference that may be of interest to management.

Customer loyalty and cross-sales

By effectively utilizing a householding strategy, a credit union can create and build relationships not with just individuals but with familial units that are associated with the individuals. This allows for credit unions to foster growth within their membership using referral programs and other similar strategies.

But more importantly, a household strategy allows for credit unions to effectively sell products to a household. Members are, historically, more inclined to promote and market to their friends and family a credit union that has treated them and their family well. Therefore, householding can play an important role as it relates to customer retention.

In addition to that, selling products and services to a household is much different than selling products to a member. Penetration statistics, in general, also change when viewing the details through the lens of a member versus through the lens of a household. So depending on your marketing strategies and how you collect penetration statistics, some of your initial data-gathering strategies may need to be adjusted.

If your team has set a goal for 15% mortgage penetration within your membership, what does that actually mean? Does it mean that you wish to have a mortgage product associated with 15% of your membership? Or does it mean that you wish to have a mortgage product associated with 15% of your households?

Get started

Householding members is a great data-gathering and cross-selling tool that your credit union would be well-served in implementing—if you aren’t already. Householding can provide a more well-rounded and simplified look at your members’ financials and help determine the best course of action.